The probability of loosing the payload, and therefore the insurance rates, can be reduced EITHER by a heavy, performance robbing payload protection system, OR by making the rocket more reliable. SpaceX intends to make the rocket more reliable because it carries no weight penalty and because it avoids the cost of launching the protected payload a second time.

1. It doesn't weigh to the insurance companies, how reliable a rocket is nor does anything else like that. What's weighing to them only is the damage quota. The damage quota is a percentage reflecting the frequency of losses and damged of insured objects. Under the view of insurance companies the reliability of a rocket or a type of rocket has nearly no meaning for this quota since there are additional other factors which can cuase a damage of the payload. Another variable impacting the rates is the probability of loss or damage.

2. As you, Peter, and someone else have discussed in the SpaceX-thread of the Latest News section the Falcon has a destruction button not causing destruction but thrust termination. At thrust termination during flight the Falcon together with its payload will fall back to Earth. The payload will fall into the ocean in that case - and should be protect against destruction in that case. If that's not doen, the thrust termination is caused and the payload is destructed at the crash into the ocean - then the insurance rates will stay where they are now, If the protection is done and the payload stays intact... - then this can cuase a reduction of the rates because the damage quota is going to be reudced as well as the probability of loss or damage.

A protection technology probably would have an impact on the damage quota or the probability of loss or damage. The reudction of the rates can be larger than the additional costs caused by a protection system. This can improve the chances of private vehicles and private spaceflight.

In this thread I consider the insurance rates to reflect the chances and fates of technologies a rocket or in particular the Falcon is to carry.

If one rocket had a history of 50% launch failure that resulted loss of the payload and another rocket had a record of delivering every payload it ever launched to the correct orbit, the insurance rate would be lower for launching the payload on second rocket, or it should be. In fact, if I were launching a payload on that second rocket and the insurance company did not offer me a very low rate, I would self insure, which means I would not buy insurance at all and accept the financial loss myself if the rocket failed. It would be like the flight insurance that airline passengers can buy now. Even though the cost is very low almost nobody buys it, because the aircraft are so reliable.

It would be like the flight insurance that airline passengers can buy now. Even though the cost is very low almost nobody buys it, because the aircraft are so reliable.

Not sure this is a correct analogy, most people have personal insurance anyway so dont bother to get more.

While you are right that premiums for launches would come down if rockets were more reliable and less likely to damage the payload, its still going to be similiar to the way car insurance works and lower risk launchers are going to equate to insuring a formula 1 racing driver on a track rather than a family saloon on the road, at least for the forseeable future.

Anything that limits financial liability will reduce costs so a recovery system should help, it just depends on whether the weight penalty is prohibative. You could just refuse to launch expensive payloads and specialise in relatively low cost payloads. Cargo canisters carrying water, food and fuel only should not incur high cost premiums.

_________________A journey of a thousand miles begins with a single step.

The reason personal insurance covers airline loss is because of the reliability of the airlines. Personal insurance will NOT cover loss in a private aircraft, because of the poorer safety record.

Look, I am not saying that the payload protection system will not reduce insurance cost. But it is not the ONLY way to reduce insurance cost.

If the rocket is 100% reliable, the protection system is useless weight and expense since it has zero chance to save a payload. If the payload protection system is 100% reliable AND the insurance does not pay for costs of a second launch, then they won't care about the rocket reliability. A more realistic situation is where neither the rocket nor the payload protection system is completely reliable. In that case the insurance company will want to know BOTH the reliability of the rocket AND the reliability of the payload protection system so that they can calculate the probability of loss of the payload.

an insurance company that insures a payload never looks to the rocket or its reliability.

The insurance company mustn't use the rocket or its reliability as a criterion for rates and premiums. This even would be against the laws. An insurance company must apply Mathematics of Insurances. This is a kind of Mathematics no engineer, only afew mathematicians and only a few economists know or know to handle. It's that a special kind of Mathematics that students can study Insurance Mathematics at the universities instead of Mathematics. Additionaly mathematicians working in or for insurance companies choose to be educated by a particular federation which they can do only after having got their DiplÃ¶ome and already been working in an insurance company. That federation is the Deutsche Aktuars-Vereingung. The eductaion by that federation makes the mathematicians actuars.

There is no insurance company looking to the rockets or their reiliability - except if the rocket itself is going to be insured.

If somone self-insures his payload then this is no way similar to what an insurance company dioes - so-called self-insurance works quite differently.

The problem really is that the protection system or the recovery system would keep safe the technology of the payload and thus stabilize the technological progress - simply think of the two experimental solar sails the Planetary Society has lost. If there would have been a protection or a recovery system the original payloads simply could have been put to another rocket and another launch could have been tried - which would have saved the time now to be waited until a new solar sail is financed.

Are you trying to tell me that if there is no payload protection system, that the insurance company does not care if the payload is launched an a Volna or an Atlas, and that the insurance rate is the same regardless of the launch vehicle? That they will charge the same rate for launch on the unreliable Volna as they do on the 100% reliable Atlas?

(EDIT)

Ekkehard Augustin wrote:

an insurance company that insures a payload never looks to the rocket or its reliability.

The US government disagrees with you. Here are some quotes from an FAA document about space an launch insurance

Quote:

the various underwriters conduct in-depth technical analyses of the satellite and the launch vehicle. The respective reliabilities of the launch vehicle variant, satellite model, and the satellite's intended orbit are evaluated.

and

Quote:

As previously mentioned, launch vehicle and satellite reliability are important rate determinants for underwriters.

I still have to read the document but the dterminants mentioned in the quote aren't used directly and solely. They are variables od formulars and equation systems of Insurance Mathematics. The consequences and links of Insurance Mathematics partially are very confusing and weird. In somne applications for example costs have to be calculated out of the sum of premiums paid during the year at the end of the year - in contrary what everyone is used to normally - SpaceX never would calculate their costs out of their revenues.

I don't consider governments to be a reliable source of such informations since the german governemnt is telling economical nonsense regarding health insurance and life insurance. The insurance branch itself and actuars are reliable sources as well as journals and science books of Insurance Mathematics.

The insurance branch itself and actuars are reliable sources as well as journals and science books of Insurance Mathematics.

. CNN isn't such a source and your quotes don't include such sources.

Peter you have repeated another error/mistake - by which you threaten threads to go spirally - to be listed and I have in mind to count how much I listed in posts up to now. The error you di now was not to keep in mind that I explicitly siad what I quoted above.

I am sufficently familiar with insurances to state that insurance commpanies look to the probability of damage or loss and to the value of the payload. The probability of damage or loss depends on more factors than the reliability of a rocket only and it is required to have a look at how the premiums are calculated - which menas nothing else than a look into the applied Insurance Mathematics and how they are applied. This tends to be a business secret to a significant portion but a sceince book about Insurance Mathematics will tell a lot about it.

Space debris also is a factor which can cuase the damage or loss of a payload - even it becomes releavnt after the payload is released from its carrier.
Next you are repeating an error which I have mentioned mcu earlier (in 2004 or beginning of 2005 I suppose): You are applying only what was in the past. In the past there were expendables only which didn't allow retrun of the payload without destruction - the rockets themselves were doomed to destruction from begiinning. This only meant that some varaibales used to find out the probability of loss or damage were zero.

But now that reusability is going to be applied these varaibales get a non-zero-value - by the intended safe return of at least the first stage. As already mentioined in another thread SpaceX explicitly intends to acvhieve 100% reusability at the larger versions of the Falcon like Falcon 9 for example. This in principle enables the safe return of a payload if the orbit isn't reached because of malfunctions, failure or emergency. Since the destruct button doesn't destroy the rocket it doesn't destroy the payload - and this also changes the value of variables of formulars and equations of Insurance Mathematics from zero to non-zero.

It is wrong to look at it from the rocket - from the paylaod must be looked at it since there are more factors than the reliability of a rocket only. And insurance companies look at it from the paylaod as well as Insurance Mathematics do - the payload is in the focus while the rocket is one factor only.

And the effect is quite clear - the Planetary Society would be better of if the solar sail never reacing an orbit would have returned safe to Earth, could have been recovered and tried to be launched by another rocket. There wouldn't have been a complete loss of the ressource invested not only - it wouldn't last that long until that technology or a technology of that kind will be launched another time. There could be another trial where noiw can't be another one. This I say because the t5hread is meant to consider it technological.

A protection system would help and assit technologies, the technological proghress and all such innovations.

The probability of damage or loss depends on more factors than the reliability of a rocket only

Yes. If you read and understood my posts you would already know that I agree with that. In case you still donâ€™t get it, I do agree that the probability of damage or loss depends on many factors and not only the reliability of the rocket.

Buy you have said that rocket reliability cannot be one of those factors.

Ekkehard Augustin wrote:

an insurance company that insures a payload never looks to the rocket or its reliability.

The insurance company mustn't use the rocket or its reliability as a criterion for rates and premiums. This even would be against the laws.

Yes. What you said doesn't mean that they are looking to the rockets - they simply involve the rocket into the calculations of probabilities. The rockets aren't used directly nor solely. Since several variables are part of the formulars etc. it is possible that the probability reamins unchanged even if reliability is increased but another factor is countervailing that - or the reliability is decreased and another factor is countervailing that. And this second alternative might become real if there is a protection system.

Peter, your argumentation has been of no use here - and reminds me to another thread where someone complained about the bandwidth you and me had eaten up. Cease arguing like you have doing in your recent few posts.

All I did was say that improved rocket reliability would lower payload insurance costs. You started the argument by saying they canâ€™t do that. And now are you going say again that they canâ€™t do that, or maybe deny that is what you meant an tell me I just misunderstood? I hope not, because you would be wasting bandwidth.

Since a vector of factors is required to set a premium and the reliability of a rocket is only one of these factors used in a formular it is impossible to reduce the premiums and rates by reliability only - it is important and essential to look what happens to the other factors. And this means that it is not sure that increased liability can reduce insurance costs - to do so is an oversimplification ignoring essential and important aspects.

I initiated this thread because the first stage of the Falcon is not going to be destructed igf there is a malfunction, a failure or an emergency which causes the destruct button to be pressed, the thrust terminated that way and makes the Falcon fall into the sea then. This might mean increased reliability but it might result in an intact or nearly inatct reusable first stage but a destroyed payload. So this all together has to be cosnidered regarding the impact on the premiums as well as the fate of the technology to be launched, the time to be waited for results from technological experiments in orbit, the speed of technological progress and much more - the insurance costs are simply areflection of all that here.

Since insurance and cost are off topic for this thread, I will restate my point without any reference to insurance or cost.

The probability of loosing the payload can be reduced EITHER by a heavy, performance robbing payload protection system, OR by making the rocket more reliable. SpaceX intends to make the rocket more reliable because it carries no weight penalty and because it avoids launching the protected payload a second time.